The province of Quebec has committed to investing $1 billion in the beleaguered Bombardier CSeries program, giving it a 49.5-percent stake in a new limited partnership in which the Canadian company would own the remaining 50.5 percent, Bombardier announced Thursday. According to the company, the sides negotiated the deal “at arms length,” meaning it won’t “materially” affect control of the company. Separately, the company has officially canceled the Learjet 85 program following an earlier “pause” attributed to weak sales.
The new investment by the Quebec government comes three weeks after Bombardier and Airbus each confirmed that they had explored “certain business opportunities” together and that talks had ended following reports that Bombardier offered a majority stake in the CSeries to the European airframer.
During its third-quarter earnings call Thursday, Bombardier noted it took a $3.2 billion charge related to schedule delays on the CSeries. Now scheduled for certification by the end of this year and first delivery to launch customer Swiss during the first half of next year, the CSeries has suffered more than two years of program delays.
The agreement between Bombardier and Quebec calls for two equal installments on April 1 and June 30, respectively. As part of the deal, Bombardier has agreed to maintain all operations and other corporate activities in the province for at least 20 years.
The rescue bid belies Bombardier’s past efforts to dismiss suggestions that it didn’t control sufficient resources to overcome sluggish sales of the airplane and a two-year delay to certification, now scheduled for late this year. Bombardier still hasn’t reached its target of selling 300 of the narrowbodies before scheduled certification. Cost overages and a paucity of order deposits prompted it to raise $3 billion in debt and equity this year and announce plans to sell part of its train business to boost its balance sheet.
All told, Bombardier recorded a third-quarter loss of $4.9 billion resulting from the CSeries charge and another $1.2 billion charge related to the canceled Learjet 85 program.
Still, Bombardier CEO Alain Bellemare struck an upbeat tone in statements released just ahead of Thursday’s call. “After just a few months, we have strengthened the management team, we have conducted in-depth reviews of our business and have a much clearer picture of what we need to do,” he said. “We are taking the right actions and we have solidified our liquidity position, giving us the confidence to execute our long-term strategic plan.
“This partnership comes at a pivotal time, with the CSeries on the verge of certification. The market is there, our leadership is in place, we have the best product and, with the support of the government, we are ready to make this aircraft a commercial success.”